| |
Finance > Investing > What To Do When You Screw Up A Trade
0
Reviews [ add review ],
Article rating : 0.00, 0 votes. Author : Larry Potter
Let's talk a minute about the idea of screwing up. How do you handle that? When you buy 500 shares of XYZ and three days later it's down $4, do you kick the cat, yell at the wife and beat the kids?? Or do you suck it up, and move on? It's all about the attitude that you bring to the table folks.
One of the things that people usually don't see in themselves, but that we see all the time is a "poor loser" What do we see? We see a person, upset with himself, possibly embarrassed, and on a mission to "make it back" Therein lies the heart of the matter. That "make it back" mentality gets plastered on their foreheads like a badge. They are going to press, squeeze, over play, etc, to get that money back. Guess what? They'll probably lose more.
Some of you have a little support system and we are in total agreement with that idea. If you have a buddy or two that you can call and discuss your trades with, great! Because maybe that friend will point out something you didn't see. Maybe he can talk some sense into you when you are holding something that's falling day by day. Maybe he can keep you from self destructing when you try and make it all up the next day.
Personal investing is a lonely, solitary game. It's a hard game. The whole world seems to be against you. At times you'll swear that the market makers know your account number and will adjust prices just enough to stop you out. It can "get" to you. But in all the years we've been playing this game the single biggest problem that we see people making is taking losses personally. Getting mad, hoping their stock will come back instead of moving on. Throwing things, getting nasty, and pressing the next trade to "make up" for it.
Folks, you are indeed going to get smacked at times. The best trade on the planet is going to reverse on you sometimes. Silly news blurbs are going to blindside you, trapping you in things you want no part of. It's all part of this game. Kicking the cat, busting your monitor and throwing the chair won't make you a dime. Buying the next stock that bounces up off it's 50 day moving average will. It's easier said than done, but keeping calm and moving on is the single best thing you can do for yourself. Sure you can talk to someone, we encourage it. But inside you have to know that losses will happen and getting upset won't stop them.
The very first trade we ever made we lost 500 dollars. We were crushed and figured we were worthless at this. But after a while we realized that none of that mattered. We got trapped in something and let pride continue to tell us that it would come back. It didn't. It taught us a lesson we'll never forget, which is "We can take a lot of small losses" but we can't stand too many big ones. Pain is a good teacher and we learned well. Now, we take my 50 cent, $1 or $2 hit and move on. If we keep playing correctly the $7 gain in ABC, the $14 in ACME, the $2.50 in XYZ, etc, etc, will far outstrip the losers. For the most part, we shrug our shoulders and say "dang it, what did we do wrong?" We find the answer and move on, hopefully wiser.
If you have to cut, then cut and run. But DO NOT let that affect the next play. If there is no play in front of you, pass. Don't make one up. Don't trade to "make up" the last one, you will lose more. If you get in a spot, figure your best way out and move on. Revenge simply does not work in market land.
To receive a FREE report on How To Trade Fast, enter your email address at:
http://lb.bcentral.com/ex/manage/subscriberprefs?customerid=12826
Article reviews
Post your review
[ Note : no HTML/URLs - will removed automatically ]
More articles from Finance > Investing
|
